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Friday, May 8, 2015

How to Teach Your Kids About Money When You Don't Have a Clue :: Part 5 - The College Years

Once upon a time there was a young family with three little
girls. Dad worked long hours growing his career in banking; Mom worked
part-time as a college professor and stayed home with the girls. Their expenses
were many. Their budget was tight.

Taking three girls to the grocery store was stressful
because not only were groceries expensive, they also had to pass the Barbie
sticker books at the check out. These sticker books lured children in with
their shiny pink cover and simple drawings of Barbie princesses.Hours of fun were promised inside the
pages of the beloved Barbie sticker book.

The catch, however, was that the stickers were sold
separately in packets, kind of like baseball cards. Inevitably at check out
(the most stressful time for moms on a tight budget, am I right?) someone would
cry out, “Mommy, can we get some Barbie stickers? Pleeeaaassse?”

“Mommy” would, at that moment, have to decide whether to
exercise extreme discipline or to cave and buy the stickers. It was a constant
battle. Was she helping her kids see the value of the stickers in any way when
she just coughed up the money to buy them without a thought? Was she just being
mean when she didn’t pay the extra $.50 to buy the stickers?

An inner (and outer!) struggle ensued every time they
ventured to the store.

Eventually the struggle subsided because the family started
a little allowance program involving three jars. Once the “Spending” jar got
some money in it, the girls finally had some money to buy their own beloved
Barbie stickers.

And Mommy finally got some peace.

***

Sort of.

The story of teaching our girls the value of a dollar is
much longer and harder than that, but this is just an early example of how we
started teaching our kids about money. Little trinkets, like Barbie stickers,
were paid with quarters that had started to add up in a jar, and the girls
started learning how to pay for things by themselves.

***

Soon these little girls grew up (too soon, might I add?).
They started thinking about college, as did their parents.

Even though college was an expectation for our daughters, we
wanted them to know the value of their education, just like the Barbie
stickers. Granted, a college education is something much more valuable, but the
principle is still the same. Kids have to have some “skin in the game” so that
they don’t merely throw away the most valuable and expensive four years of
their lives.

****

A Note about Planning

Obviously, B and I had planned for our kids’ college fund
from pretty much the first day that each of our girls was born. For us, paying
for our kids’ college education was a priority, so we started saving early.

Now, I understand that others have different thoughts about
paying for college, and I’ve seen it done successfully in many other ways than
what we did. We have friends who are making their kids pay for one full year of
college, no matter what, and these kids have done a fantastic job of creating
business opportunities for themselves from an early age so they could save
money for college. Others opt for community college for the first two years.
Still other rely on loans and scholarships and are grateful for the help. Most of us work with a combination of these options.

Every family’s situation is different and that’s O.K. The
point is that you have to decide early on how you are going to handle paying
for college if college is an option for your kids. Whatever you do, DO NOT wait
until their senior year to figure it out. By then it’s way too late.

***

O.K., back to our expectations for our kids. As I said,
paying for our girls’ college education was a major financial priority for us,
so we started saving early. But we wanted the girls to also value the
(incredible, amazing, startling, . . .) high cost of their education as well,
so they had to contribute something.

Throughout their college years we continued to give them an allowance
for their necessities—clothing, entertainment, etc.—but, as I mentioned last time, it wasn’t much. They still needed to work in order to buy the things they
wanted.

We also expected our girls to pay for their books, which has
taught them some very creative ways of obtaining their outrageously expensive
textbooks (some cost over $200!). Just ask any college student and they will
tell you the cheapest ways to find books, and it probably isn’t the college
bookstore.

We had other expectations, too. One is that we would pay for
four years of an undergraduate education, but not graduate school. That is up
to them. Again, creative financing will come into play here.

A second expectation is that this undergraduate education is
meant to prepare them for real life (i.e. a job) and that, unless some
extraordinary circumstances became clear, they should be able to live
independently upon graduation. Enough said about that.

As I said earlier, everyone does the paying-for-college
thing differently, and expectations for what happens after college vary as
well. My point is that you can’t make these decisions or set these expectations
during your child’s senior year of high school. Talk to your kids about college
very early in their life. If higher education is an expectation in your family,
set that expectation early on. If you will contribute something to their
education, or even if you can’t, let your kids know that as well.

Talk to your kids about college and how it will be financed.
Talk to your kids about life after college and what you expect from them then.
Just talk to your kids so they don’t feel blindsided when the day comes and you
haven’t prepared them for the financial realities. Talk to them so that they understand that a college education is something of great value and should not be taken for granted.

Is it scary to think about life after college? Yes,
sometimes it is. Sometimes you wonder if your child will be able to make it out
there. But here’s what I’ve learned: the world isn’t such a big, bad, scary
place. There are people out there who want to see your kid succeed. There is a
place for them.

We just have to let them go and give it a try.

Next week I’ll wrap up
this series about money by talking about letting our kids be financially independent.
But I’d really love to know your thoughts and/or questions. Leave me a comment!